An individual desirous of buying or selling securities can do so by two methods.
He can approach any other individual and transact. This process is called an ’Off Market Transaction’. This process is cumbersome, as it is difficult to find a willing counterparty. To make this process easy, securities need to be liquid, i.e., easily available.
This is done through a platform called the ’Stock Exchange’, where willing parties transact through an intermediary called a broker. Transactions may also occur through a sub-broker, i.e., an agent of a broker. As per the Securities and Exchange Board of India (SEBI) rules, only registered brokers and sub-brokers can buy, sell or deal in securities. It is, hence, essential for an investor to open an account with a broker before he starts buying or selling securities.